While cash was losing its hold even before Covid 19, the pandemic has accelerated the global transition towards a cashless economy. With winter setting in and infection rates rising again, parts of the world have entered into a second lockdown. Electronic payment has become the norm for everyday commerce and physical money may soon become a thing of the past.
Digital payments had started in India much before the Covid 19 pandemic. According to Razorpay’s ‘The Era of Rising Fintech’ report, between 2018-2019, digital payments in India grew by 383 percent. In 2020, Covid 19 forced institutions worldwide to rethink contact with any questionable surfaces, including people too, digital transactions started picking up in May mainly because of the fear of handling contaminated cash transactions. It was convenient to use digital payments which also promised greater transparency and less dependency on middle-men and banking monopolies.
A Capgemini survey of 11 countries shows that India has emerged as the leader in digital payments during the global pandemic and interestingly, senior citizens are leading the way. Mastercard’s recent study reports more than 40% growth in contactless transactions globally in the first quarter of 2020.
In the financial year 2019, India’s digital payments market was valued at INR 1,638.49 trillion which is expected to further go up to INR 4,323.63 trillion by 2024.
According to Forbes, Amazon’s value alone has risen by 570 billion US dollars this year.
With the global online payment platforms witnessing a severe boost, surprisingly, e-commerce including online shopping, video streaming, pays a small part in the consumer payments scenario. The accelerated push towards a cashless economy arises from different industries and economic sectors which are not specifically associated with cashless or contactless payment.
China began as early as February 2020 by disinfecting and even destroying paper money if they suspected it to be infected. US and South Korea federal reserves quarantined cash to limit the spread of Covid 19.
With sudden lockdowns imposed in most countries, people were left stranded at home for weeks together. Person to person payment apps came to the rescue to send money to families and friends in need, to pay rent to houseowners, etc. All these transactions can be done through smartphones, without the use of physical cash or a card to interact with a point of sales machine.
In a cashless society, payments can be made online which is completely remote and for unattended or attended retail businesses, proximity payments can be made. Contactless mobile payments can be made by the proximity method, which may have credit and debit cards stored in an e-wallet.
Vending machines which were very popular in hospitals, offices, airport terminals, etc, because of the convenience they offer, have become more significant with Covid 19. When the government ordered for stores etc to be shut or operate for limited hours during weeks of lockdown, vending machines delivered contactless experiences to users. With people looking to limit the use of cash for fear of contamination, businesses with vending machines quickly updated their hardware. They offered options such as cashless card readers, digital screens to run educational and instructional videos on payment icons, credit card safety, how to swipe and use cards for purchases.
Studies earlier had established that businesses who have vending machines equipped with cashless readers see their overall sales receive a dramatic boost. The pandemic re-established that vending machines were a convenient and useful way to purchase without having any contact.
Cashless tap cards are not just cheaper but also speeds up boarding time and reduces delays for all commuters. A lot of cities in the world have been using this convenient system of payment and the pandemic has given other transit agencies in different cities of the world an opportunity to switch to a no-cash system.
Transport for London (TfL) has been using it for years and has proved how successful this system is. In March 2020, Metrolinx in Ontario, Canada, got rid of cash payment options to ensure the safety of its staff. It encouraged commuters to download a mobile app to add money and use the tap and go card readers installed in its buses to check the tap card balance.
Baguio City, Philippines launched a cashless fare collection system in July, to curb the rising number of Covid 19 affected transport workers. Through tap cards, NFC bank cards, or QR codes, the city from then on uses cashless, contactless, and seamless payment transactions.
Cashless tolls are a great boon for commuters as it allows them to drive on without halting at toll booths. This turned particularly effective and beneficial during the pandemic as it eliminated the need for commuters to halt and interact with toll personnel and contributed to the safely of all.
Transport agencies worldwide are supporting cashless toll payment as it is safe, contactless, and also saves time.
In India, the number of cashless toll passes issued by the national highways have increased substantially. In the US, the state of Pennsylvania turned completely cashless and the tolling agency sends non-pass holders their invoices through mail.
Covid 19 brought in lockdown and fuel consumption fell initially but as cities opened up, it picked up again. However, with the fear of contaminated paper money, the need for cashless payments at gas stations emerged.
Even Iran which favours cash, called for cashless payments. To capitalise on the demand for non-touch payment services, 7-Eleven, the convenience store in the US, launched a new loyalty programme for fuel purchases in some US states which allow customers to minimise interaction and contact with common spaces and surfaces and also save at the pump.
Contactless payments is one of the key factors that will be put in place to ensure the success of the safety and health measures that museums have, as they reopen.
When the virus outbreak started, the Lourve museum in Paris was one of the first museums to immediately stop accepting cash payments. Amsterdam’s Rijksmuseum opened up in June with a cashless payment system to make sure that ticket queues were short and visitors could use contactless credit cards, thus reducing physical contact between the museum staff and visitors.
The American Alliance of Museums’ have issued guidelines to reopen, asking museums to have in place cashless POS systems like Apple Pay and contactless credit cards. Prominently displaying the payment icon images at the POS systems will help visitors understand what payment methods are accepted.
Movie theatres are opting for practical contactless payment services which will help to cut down on contact between grubby bills and food-handling areas. Cinemark, one of the world’s largest movie exhibitors reopened its theatres in phases and declared that cash payments will not be accepted at the concession stand. Instead, the company designated an area at each theatre for customers to exchange cash for a prepaid card.
In Thailand, Major Cineplex installed cashless payment kiosks so moviegoers could pay for tickets directly through NFC cards.
Casinos have always been a cash industry and cashless gambling is a notion hard to consider. However, Covid 19 has even pushed casinos to consider adopting cashless transactions. The $261 billion American casino industry could go for cashless payment options if the American Gaming Association’s call on regulators to make it easier to adopt cashless transactions is heard. This is also a move to bring in the new generation who doesn’t use cash at all. Tap to go cards at casinos can also have rewarding customer loyalty programmes.
Canadian Casinos are also exploring cashless and other no-touch technologies. In the case of slot winners, instead of receiving cash money at the machine, winners could be given a credit slip and paid out at a sanitised cash cage.
With the onset of Covid 19, the food retail industry quickly stepped up to adopt best practices in cleaning and sanitizing. Grocery stores offered cashless payment options to customers, such as wave payment and tap and go cards.
Walmart, the world’s largest retailer, offered a no-contact payment option for customers with a new option added at the cashless stores which allowed customers to simply scan a QR code with their smartphones Publix Super Markets introduced new tap to pay systems turning over 1,200 outlets into cashless stores all over the US.
Beauty Salons were one of the most affected by the pandemic. As they have reopened, there is a conscious effort to follow safety protocols and keep contact at a minimum. They are doing away with commonly used surfaces like PIN pads. Working together with banking service providers to waive off signatures and PINS for transactions, salons set to put in place a cashless policy and install good to go pay devices that do not need staff members to handle client debit and credit cards. Some salons are also enabling clients to buy their products through cashless payment systems and delivering them home.
With Covid 19, the cash payment market seems to be declining rapidly, also propelled by the younger generation who is comfortable carrying no cash and making electronic payments through their smartphones or watches. Millennials have always been users of cashless payment services and now it is being adopted by other age groups also. Mastercard’s survey shows that there has been a significant shift to contactless payments, especially in the Asia Pacific region. COVID-19 has changed the payments landscape and paved the way for people shopping in the future too. Consumers have seen and experienced the long-term benefits of having a cleaner, safer and faster way to make payments and become more socially responsible too. With the virus likely to have a lasting impact on lives, a cashless society seems to be the path the world is headed towards and is ready for.